More states offered claims estimates

WASHINGTON -- New claims for state unemployment insurance fell sharply last week but still hovered at a level suggesting that employers' appetite for workers is waning a bit.

JEANNINE AVERSA

Published 12:00 am, Friday, December 29, 2000

The Labor Department reported Thursday that initial applications for jobless benefits declined by 23,000 to a seasonally adjusted 333,000 for the week ending Dec. 23. That was the lowest level since the beginning of December.

However, a government analyst cautioned that the figures were based on a larger-than-usual number of states providing estimates for new claims -- rather than the actual number of new claims -- due to the Christmas holiday. Given that, there's potential for a big revision in either direction next week, the analyst said.

Many analysts were expecting claims to fall by around 4,000.

The more stable four-week moving average of jobless claims, which smoothes out week-to-week volatility, declined to 340,750. That was the lowest point since Nov. 18, when claims were at 331,250.

Despite last week's decline, "Jobless claims have trended higher in the last few weeks, indicating that job growth is slowing," said Andrew Groat, economist for Merrill Lynch.

With the economy slowing, analysts expect that job growth will continue to moderate and that the nation's unemployment rate, which now stands at 4.0 percent, near a three-decade low, will eventually rise.

When the Federal Reserve was boosting interest rates between June 1999 and May of this year, it was worried, among other things, that businesses' strong demand for workers would lead to big increases in wages and benefits -- added costs that could be passed along to consumers in sharply higher prices for goods.

But last week, the Fed shifted its main focus away from fighting inflation to guarding against a sluggish economy, a move that positions the central bank to cut interest rates should the economy show signs of seriously weakening.

For the work week ending Dec. 16, 17 states and territories reported a decrease in new jobless claims, while 35 reported increases. The information lags a week behind national figures and is not seasonally adjusted.

The state with the biggest drop in new claims was North Carolina, which recorded 6,141 fewer claims. Officials attributed the decline on fewer layoffs in the textile, furniture and trade industries.

The state with the biggest increase was Illinois, up by 5,077. Officials blamed layoffs in the construction, service and manufacturing industries for the rise.